Why does Italy want to spend more?

Italy's government, made up of the populist Five Star Movement and right-wing populist League, came to power vowing to "end poverty" with a minimum income for the unemployed, along with promises of tax cuts and scrapping extensions to the retirement age.

To fulfil its promises it trebled the previous government's deficit target of 0.8% of Italy's economic output.

In his letter to the Commission, Mr Tria reaffirmed Italy's commitment to maintain public finances, but insisted it would stick to a deficit target of 2.4% which he said was an "impassable limit".

He said Italy would aim to generate 1% of GDP by selling state assets with which it would pay back debt. However, it also faces considerable costs because of "exceptional events".

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Damage from flooding in several areas of Italy will cost some 0.2% of economic output, Italy's finance minister predicts

In his letter he cited the cost of the collapse of the Morandi bridge in Genoa in August, which 43 people died; he also mentioned weeks of flooding and bad weather that caused damage in many areas of Italy in recent weeks.

The total cost of repairs would equal around 0.2% of GDP for the next three years.

"For the first time the Commission is obliged to request a euro area country to revise its draft budgetary plan but we see no alternative than to request the Italian authorities to do so," the European Commission Vice-President for the euro, Valdis Dombrovskis, said last month.

He pointed out that Italian taxpayers were having to spend as much servicing the national debt as on education.

Dutch Finance Minister Wopke Hoekstra said it was very disappointing that Italy had failed to change its budget. Austria said it would back the Commission if it stepped up its action against Italy with what is known as an Excessive Deficit Procedure (EDP).

German Chancellor Angela Merkel said on Tuesday that the EU wanted to reach out to Italy but that it had adopted budget rules "that we all now have in common".